Bullion metals end moderately lower

Gold extends its declines to a fifth-straight session

Bullion metals ended moderately lower on Tuesday, 01 April 2014 at Comex. Gold futures on Tuesday extended their declines to a fifth-straight session, but stuck to a tight trading range, as traders looked to U.S. economic data for clues on the demand outlook for the metal.

Gold for June delivery fell $3.80, or 0.3%, to settle at $1,280 an ounce on the Comex division of the New York Mercantile Exchange. Prices have now lost a total of 2.5% in five trading sessions.

May silver declined by about 6 cents, or 0.3%, to $19.69 an ounce after Monday's 0.2% loss.

In overnight news, China's manufacturing purchasing managers' index (PMI) rose for the first time in six months, coming in at 50.3 in March versus 50.2 in February. However, the similar Markit-HSBC survey showed the China PMI coming in at 48.0 in March from 48.5 in February. These two reports ostensibly cancelled each other out.

In the European Union, the Markit manufacturing PMI came in at 53.0 in March from 53.2 in February. While EU manufacturing activity has expanded for nine months running, the worrisome part of the Markit report was that some manufacturers were starting to drop their prices for their goods. The European Central Bank is worried about deflation setting in for the EU and could act soon to provide further monetary policy stimulus. The monthly ECB monetary policy meeting is on Thursday.

U.S. economic data released Tuesday was generally upbeat and also kept gold buyers scarce. Traders and investors are awaiting the U.S. jobs report on Fridayarguably the most important U.S. economic report of the month. Construction spending increased 0.1% in February after falling a downwardly revised 0.2% (from +0.1%) in January while the consensus expected an increase of 0.1%. Extreme winter weather conditions in January and February were blamed for a general downturn in economic data; however, construction, which should feel the brunt of the negative winter effects, was largely in-line with recent trends.

The ISM Manufacturing Index increased to 53.7 in March from 53.2 in February. The consensus expected the index to increase to 54.0. Extreme winter weather conditions were blamed for a deterioration in the ISM Manufacturing Index in January. Yet, as temperatures returned to normal, the ISM Manufacturing Index remained well below its Q4 2013 averages.

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